The loan agreement
Any loan made by a bank will be governed by a loan agreement setting out the terms and conditions of the loan. It is signed by the bank and countersigned by the borrower to signify its agreement with the terms and conditions as stated. The loan agreement can take many different styles, and each bank – and the firm of solicitors it uses – can have its own house style. The loan agreement can be as short as one page and still be legally binding so long as the integral parts of the loan are identified and agreed. In a basic loan agreement these are:
■ The amount of the loan
■ The purpose
■ The period
■ The rate of interest plus any fees payable by the borrower
■ How and when repayment will be made
■ Any security.
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